on the next few decades

has arrived.

And it's not social media.

It's not big data.

It's not robotics.

It's not even AI.

You'll be surprised to learn

that it's the underlying technology of digital currencies like Bitcoin.

It's called the blockchain. Blockchain.

Now, it's not the most sonorous word in the world,

but I believe that this is now

the next generation of the internet,

and that it holds vast promise for every business, every society

and for all of you, individually.

You know, for the past few decades, we've had the internet of information.

And when I send you an email or a PowerPoint file or something,

I'm actually not sending you the original,

I'm sending you a copy.

And that's great.

This is democratized information.

But when it comes to assets --

things like money,

financial assets like stocks and bonds,

loyalty points, intellectual property,

music, art, a vote,

carbon credit and other assets --

sending you a copy is a really bad idea.

If I send you 100 dollars,

it's really important that I don't still have the money --

(Laughter)

and that I can't send it to you.

This has been called the "double-spend" problem

by cryptographers for a long time.

So today, we rely entirely on big intermediaries --

middlemen like banks, government,

big social media companies, credit card companies and so on --

to establish trust in our economy.

And these intermediaries perform all the business and transaction logic

of every kind of commerce,

from authentication, identification of people,

through to clearing, settling and record keeping.

And overall, they do a pretty good job.

But there are growing problems.

To begin, they're centralized.

That means they can be hacked, and increasingly are --

JP Morgan, the US Federal Government,

LinkedIn, Home Depot and others

found that out the hard way.

They exclude billions of people from the global economy,

for example, people who don't have enough money

to have a bank account.

They slow things down.

It can take a second for an email to go around the world,

but it can take days or weeks

for money to move through the banking system across a city.

And they take a big piece of the action --

10 to 20 percent just to send money to another country.

They capture our data,

and that means we can't monetize it

or use it to better manage our lives.

Our privacy is being undermined.

And the biggest problem is that overall,

they've appropriated the largesse of the digital age asymmetrically:

we have wealth creation, but we have growing social inequality.

So what if there were not only an internet of information,

what if there were an internet of value --

some kind of vast, global, distributed ledger

running on millions of computers

and available to everybody.

And where every kind of asset, from money to music,

could be stored, moved, transacted, exchanged and managed,

all without powerful intermediaries?

What if there were a native medium for value?

Well, in 2008, the financial industry crashed

and, perhaps propitiously,

an anonymous person or persons named Satoshi Nakamoto

created a paper where he developed a protocol for a digital cash

that used an underlying cryptocurrency called Bitcoin.

And this cryptocurrency enabled people to establish trust and do transactions

without a third party.

And this seemingly simple act set off a spark

that ignited the world,

that has everyone excited or terrified or otherwise interested

in many places.

Now, don't be confused about Bitcoin --

Bitcoin is an asset; it goes up and down,

and that should be of interest to you if you're a speculator.

More broadly, it's a cryptocurrency.

It's not a fiat currency controlled by a nation-state.

And that's of greater interest.

But the real pony here is the underlying technology.

It's called blockchain.

So for the first time now in human history,

people everywhere can trust each other

and transact peer to peer.

And trust is established, not by some big institution,

but by collaboration, by cryptography

and by some clever code.

And because trust is native to the technology,

I call this, "The Trust Protocol."

Now, you're probably wondering: How does this thing work?

Fair enough.

Assets -- digital assets like money to music and everything in between --

are not stored in a central place,

but they're distributed across a global ledger,

using the highest level of cryptography.

And when a transaction is conducted,

it's posted globally,

across millions and millions of computers.

And out there, around the world,

is a group of people called "miners."

These are not young people, they're Bitcoin miners.

They have massive computing power at their fingertips --

10 to 100 times bigger than all of Google worldwide.

These miners do a lot of work.

And every 10 minutes,

kind of like the heartbeat of a network,

a block gets created

that has all the transactions from the previous 10 minutes.

Then the miners get to work, trying to solve some tough problems.

And they compete:

the first miner to find out the truth and to validate the block,

is rewarded in digital currency,

in the case of the Bitcoin blockchain, with Bitcoin.

And then -- this is the key part --

that block is linked to the previous block

and the previous block

to create a chain of blocks.

And every one is time-stamped,

kind of like with a digital waxed seal.

So if I wanted to go and hack a block

and, say, pay you and you with the same money,

I'd have to hack that block,

plus all the preceding blocks,

the entire history of commerce on that blockchain,

not just on one computer but across millions of computers,

simultaneously,

all using the highest levels of encryption,

in the light of the most powerful computing resource in the world

that's watching me.

Tough to do.

This is infinitely more secure

than the computer systems that we have today.

Blockchain. That's how it works.

So the Bitcoin blockchain is just one.

There are many.

The Ethereum blockchain was developed by a Canadian named Vitalik Buterin.

He's [22] years old,

and this blockchain has some extraordinary capabilities.

One of them is that you can build smart contracts.

It's kind of what it sounds like.

It's a contract that self-executes,

and the contract handles the enforcement, the management, performance

and payment -- the contract kind of has a bank account, too, in a sense --

of agreements between people.

And today, on the Ethereum blockchain,

there are projects underway to do everything

from create a new replacement for the stock market

to create a new model of democracy,

where politicians are accountable to citizens.

(Applause)

So to understand what a radical change this is going to bring,

let's look at one industry, financial services.

Recognize this?

Rube Goldberg machine.

It's a ridiculously complicated machine that does something really simple,

like crack an egg or shut a door.

Well, it kind of reminds me of the financial services industry,

honestly.

I mean, you tap your card in the corner store,

and a bit stream goes through a dozen companies,

each with their own computer system,

some of them being 1970s mainframes

older than many of the people in this room,

and three days later, a settlement occurs.

Well, with a blockchain financial industry,

there would be no settlement,

because the payment and the settlement is the same activity,

it's just a change in the ledger.

So Wall Street and all around the world,

the financial industry is in a big upheaval about this,

wondering, can we be replaced,

or how do we embrace this technology for success?

Now, why should you care?

Well, let me describe some applications.

Prosperity.

The first era of the internet,

the internet of information,

brought us wealth but not shared prosperity,

because social inequality is growing.

And this is at the heart of all of the anger and extremism

and protectionism and xenophobia and worse

that we're seeing growing in the world today,

Brexit being the most recent case.

So could we develop some new approaches to this problem of inequality?

Because the only approach today is to redistribute wealth,

tax people and spread it around more.

Could we pre-distribute wealth?

Could we change the way that wealth gets created in the first place

by democratizing wealth creation,

engaging more people in the economy,

and then ensuring that they got fair compensation?

Let me describe five ways that this can be done.

Number one:

Did you know that 70 percent of the people in the world who have land

have a tenuous title to it?

So, you've got a little farm in Honduras, some dictator comes to power,

he says, "I know you've got a piece of paper that says you own your farm,

but the government computer says my friend owns your farm."

This happened on a mass scale in Honduras,

and this problem exists everywhere.

Hernando de Soto, the great Latin American economist,

says this is the number one issue in the world

in terms of economic mobility,

more important than having a bank account,

because if you don't have a valid title to your land,

you can't borrow against it,

and you can't plan for the future.

So today, companies are working with governments

to put land titles on a blockchain.

And once it's there, this is immutable.

You can't hack it.

This creates the conditions for prosperity

for potentially billions of people.

Secondly:

a lot of writers talk about Uber

and Airbnb and TaskRabbit and Lyft and so on

as part of the sharing economy.

This is a very powerful idea,

that peers can come together and create and share wealth.

My view is that ...

these companies are not really sharing.

In fact, they're successful precisely because they don't share.

They aggregate services together, and they sell them.

What if, rather than Airbnb being a $25 billion corporation,

there was a distributed application on a blockchain, we'll call it B-Airbnb,

and it was essentially owned by all of the people

who have a room to rent.

And when someone wants to rent a room,

they go onto the blockchain database and all the criteria,

they sift through, it helps them find the right room,

and then the blockchain helps with the contracting,

it identifies the party,

it handles the payments

just through digital payments -- they're built into the system.

And it even handles reputation,

because if she rates a room as a five-star room,

that room is there,

and it's rated, and it's immutable.

So, the big sharing-economy disruptors in Silicon Valley

could be disrupted,

and this would be good for prosperity.

Number three: